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combined, comprised, facility, intercompany, promissory, proper, revolving, validating
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reflecting, replace
Financial report summary
?Risks
- Risks Related to Our Business
- Differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models may adversely affect our financial results, capitalization and financial condition
- Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results and negatively affect our statutory capital
- The ongoing COVID-19 pandemic could materially adversely affect our business, financial condition and results of operations, including our capitalization and liquidity
- Changes in accounting standards issued by the Financial Accounting Standards Board may adversely affect our financial statements
- A downgrade or a potential downgrade in our financial strength ratings could result in a loss of business and materially adversely affect our financial condition and results of operations
- An inability to access credit facilities could result in a reduction in our liquidity and lead to downgrades in Brighthouse Financial’s credit ratings and our financial strength ratings
- Reinsurance may not be available, affordable or adequate to protect us against losses
- If the counterparties to our reinsurance or indemnification arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could materially adversely affect our financial condition and results of operations
- Factors affecting our competitiveness may adversely affect our market share and profitability
- Brighthouse Financial may experience difficulty in marketing and distributing products through our distribution channels
- The failure of third parties to provide various services, or any failure of the practices and procedures that these third parties use to provide services to us, could have a material adverse effect on our business
- Changes in our deferred income tax assets or liabilities, including changes in our ability to realize our deferred income tax assets, could adversely affect our financial condition or results of operations
- Risks associated with climate change could adversely affect our business, financial condition and results of operations.
- Extreme mortality events may adversely impact liabilities for policyholder claims
- Economic Environment and Capital Markets-Related Risks
- If difficult conditions in the capital markets and the U.S. economy generally persist or are perceived to persist, they may materially adversely affect our business and results of operations
- Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs and our access to capital
- We are exposed to significant financial and capital markets risks which may adversely affect our financial condition, results of operations and liquidity, and may cause our net investment income and our profitability measures to vary from period to period
- Investments-Related Risks
- Should the need arise, we may have difficulty selling certain holdings in our investment portfolio in a timely manner and realizing full value given that not all assets are liquid
- Our requirements to pledge collateral or make payments related to declines in estimated fair value of derivatives transactions or specified assets in connection with OTC-cleared and OTC-bilateral transactions may adversely affect our liquidity, expose us to central clearinghouse and counterparty credit risk, or increase our costs of hedging
- Gross unrealized losses on fixed maturity securities and defaults, downgrades or other events may result in future impairments to the carrying value of such securities, resulting in a reduction in our profitability measures
- Our valuation of securities and investments and the determination of the amount of allowances and impairments taken on our investments are subjective and, if changed, could materially adversely affect our financial condition or results of operations
- Defaults on our mortgage loans and volatility in performance may adversely affect our profitability
- The defaults or deteriorating credit of other financial institutions could adversely affect us
- Ongoing military actions, the continued threat of terrorism, climate change as well as other catastrophic events may adversely affect the value of our investment portfolio and the level of claim losses we incur
- Regulatory and Legal Risks
- Our business is highly regulated, and changes in regulation and in supervisory and enforcement policies may materially impact our capitalization or cash flows, reduce our profitability and limit our growth
- A decrease in our RBC ratio (as a result of a reduction in statutory surplus or increase in RBC requirements), or a change in the rating agency proprietary capital models, could result in increased scrutiny by insurance regulators and rating agencies and could have a material adverse effect on our financial condition and results of operations
- We are subject to federal and state securities laws and regulations and rules of self-regulatory organizations which, among other things, require that we distribute certain of our products through a registered broker-dealer; failure to comply with these laws or changes to these laws could have a material adverse effect on our operations and our profitability
- Changes in tax laws or interpretations of such laws could reduce our earnings and materially impact our operations by increasing our corporate taxes and making some of our products less attractive to consumers
- Litigation and regulatory investigations are common in our businesses and may result in significant financial losses or harm to our reputation
- Any gaps in our policies and procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business
- Brighthouse Financial’s associates and those of our third-party service providers may take excessive risks which could negatively affect our financial condition and business
- Any failure to protect the confidentiality of client and employee information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations
- Risks Related to Our Separation from, and Continuing Relationship with, MetLife
- If the Separation were to fail to qualify for non-recognition treatment for federal income tax purposes, then we could be subject to significant tax liabilities
- Disputes or disagreements with MetLife may affect our financial statements and business operations, and Brighthouse Financial’s contractual remedies may not be sufficient
Management Discussion
- Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.
- Loss before provision for income tax was $95 million ($73 million, net of income tax), a higher loss of $76 million ($60 million, net of income tax) from a loss before provision for income tax of $19 million ($13 million, net of income tax) in the prior period.
- ◦favorable changes in ceded reinsurance.